"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Monday, October 5, 2009

A Nevada Silver Mystery?

Morning Miners!

It is 5:52 AM and Monday just roared into the break room for a cup. She's headed uptown to give someone a hard time so watch your door. Once she clears out of town, we should be set for some pleasant Autumn weather.

I read an interesting article this weekend by geology enthusiast, Andrew Alden. Here's the link:

The Nevada Silver Rush

He takes us back to the early days of Nevada's silver mining when a surface bonanza of silver made for easy pickings. Heavy gray crusts of silver formed on the surface of our deserts over millions of years and were polished by dust and wind to the dull luster of a cow horn. This likeness brought the name "horn silver" which is a mineral form of silver chloride called Chlorargyrite. The old timers could find big silver beds larger than football fields and it didn't take much more than a shovel to get rich. Of course the ease of finding and removing these crusts led to their disappearance from the Nevada landscape in just several years.

A Comstock Miner

The more enduring silver mining was the common hard rock variety such as the Comstock Lode exploitation of large silver deposits discovered under Virginia City and later on, the silver-lead mining in our own Eureka. According to Alden, the curious thing about these early days is the lack of surviving specimens from the original surface bonanza. Here is an image of horn silver displayed in a mineral case at the University of Bremen. Alden points out that it comes from Australia and he has yet to find a specimen from Nevada.

This is a good mystery for the Readers (yup, that's you) because I have a hunch that someone has seen a real chunk of Nevada horn silver in their lifetime. There's probably one sitting in our own museum! Let the ole Colonel know if you have any clues.

Here's an interesting thought about gold. The one-month average price was just a tad over $1000 at the end of September. Based on my models this is where I believe the price of silver, copper and oil should be when gold rattles around in the $1000 sage brush:

silver (fair value) $16.47; range (2-standard deviations) $15.90 to $17.05
copper (fair value) $2.867; range (2-standard deviations) $2.547 to $3.189
oil (fair value) $70.47; range (2-standard deviations) $63.89 to to $77.05

These numbers are derived from models of each commodity versus gold for the past 3-months, just something for you to scratch your head on. Note that $3 copper is still possible but $80 oil is not likely in the near term. That deserves a Colonel Yee-ha!

Enough talk, let's walk the walk:

CAUTION: 4-WD is ON - the VIX or "fear index" remains above 25 today. We are still experiencing off-road conditions in the markets (what's this?)

Yellow light is ON for possible adverse regulation/legislation (mercury emissions)

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.98 in early trading to $68.97 (November contract); Gold is up $0.6 to $1004.9 (December contract, most active); Silver is down $0.020 to $16.250(December contract); Copper is down $.0110 to $2.6705 (December contract); Molybdenum is steady at $13.6.

The DOW is up 50.78 points to 9538.45; the S&P 500, up 8.15 points to 1033.36. The miners are mostly up:

Barrick (ABX) $36.08 down 0.07%
Newmont (NEM) $42.62 up 1.20%
General Moly (Eureka Moly, LLC) (GMO) $3.06 up 3.03%
Freeport McMoran (FCX) $66.80 up 1.43% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are up, (a "tell" for General Moly):

Nucor (NUE) $44.89 up 1.19% - domestic steel manufacturing
ArcelorMittal (MT) $35.05 up 1.54% - global steel producer
POSCO (PKX) $103.08 up 2.77% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.57% to $1,170,221.02 (what is this?).


Colonel Possum

Headline Photograph by Mariana Titus

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